Super-senior AAA-rated CMBS spreads retreated from recent highs of 90 basis points (bp) seen when a $1.2-billion offering by Cantor Commercial Real Estate, Deutsche Bank, Ladder Capital and Nataxis priced on August 13. Super-senior AAA-rated CMBS are currently trading in the 85 bp area. That said, the heavy CMBS calendar for September may again pressure spreads if there is not enough buyer demand to absorb the potential supply.
A recent survey by Commercial Mortgage Alert indicates 19 transactions totaling $15 billion are expected to price in September. According to a research report by Jeffries, the ebb and flow of CMBS new-issue supply is likely to play a role in spread direction. Jeffries suggests the increased volume in CMBS offerings appears to be a result of conduit lenders lowering their offered mortgage rates to entice borrowers; this could mean that volumes may increase during the balance of 2014. Indeed, Commercial Mortgage Alert has identified another 5 deals totaling $6 billion expected to price in October and the potential for more deals to be added. The September-October total of $21 billion would be the largest two-month total since the market crash, and it would put the market on track to break $100 billion in issuance for the year.